The present invention is related generally to hierarchical organization of an entity's merchandise, i.e., product/inventory, and more specifically, to a method and system for merchandise hierarchy refinement by incorporating product correlation. More specifically, the present invention relates to a method and system of incorporating product correlation information discovered in customers' shopping profiles (records) to adjust an existing merchandise hierarchy with a constraint on the consistency with the existing hierarchy.
Merchandise hierarchy is a tree-like structure for organizing merchandise categories and products of an entity, e.g., a product wholesaler/retailer. It plays a key role in the business decision-making process. First, merchandise hierarchy is the base of management and operation structure: departments are usually organized according to the merchandise hierarchy and are responsible for all business related but sub-categories and products under the category, e.g., procurement, forecasting, shelf layout, etc. Moreover, merchandise analytics at levels defined in the hierarchy are the basis of business strategy adjustment, such as statistics, reporting, performance evaluation, etc.
Currently, there is no mechanism for incorporating customers' shopping behavior (e.g., a shopping profile or history) in such merchandise analytics. Such information is useful to facilitate improvement of the business structure and make it truly customer-oriented.